In October of last year, I wrote a blog entitled “An Us vs Them Mentality.” At the time, I was referring to the pitting of Card Issuers/Payments Networks vs Merchants. However, an article I just read in US News & World Report, entitled “12 New Ways to Outsmart your Bank,” also creates an “us vs them,” but in this case, it’s the bank vs the consumer.
The article begins by mentioning that banks are undergoing changes right now, due to regulations and other pressures. And then, it states, ‘Most of the regulatory reforms are meant to make financial products easier to understand and more equitable. But they’re also raising costs to banks, forcing them to find new sources of revenue–which means more fees and fewer services for customers. Here are a dozen of the biggest changes, with strategies for how consumers can minimize fees and get the best perks:…’
The article then lists the twelve major changes that banks might make to compensate for lost revenue and what consumers can do to avoid the fees or charges that the bank has the opportunity to levy. I get that. I’m also all for transparency and fully understanding products. Where I’m doing a bit of shaking my head is that the article seems to be implying an adversarial relationship between the bank and its customers. In other words, the author appears to be saying “Watch out! Your bank is out to get you.”
And perhaps that’s understandable. Rightly or wrongly, banks have not exactly been the best-regarded institutions for the past couple of years. Consumers tend to look at them as a necessity, not a choice. Additionally, there has been much negative press about how the latest regulations will affect banks, who then will use the opportunity to charge customers. Again, I get that.
But this adversarial relationship is not sustainable. The bank or banks that figure out how to better work with their customers to drive long-term relationships will be the ones that gain market share and profitability over the long run. And if customers trust their financial institutions and don’t feel as if they need to watch over their shoulders to anticipate every move, they will be more likely to consolidate their relationship with their chosen company, enhancing long-term engagement, retention and profitability.
Sounds like mom and apple pie, doesn’t it? But here’s the thing. A robust Loyalty strategy (note: loyalty is capitalized-which means that I’m talking about more than a rewards program) that identifies customer needs, matches them with bank objectives and capabilities, and creates mutual value can be an invaluable tool to improving top line revenue and profits, without having to engage in the gotcha game.
